How the greatest startup program in Brazil is being killed by politics
It took two years to build the best startup and innovation program Brazil has ever seen, and just a couple of months to kill it.
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If you still haven’t heard about it, San Pedro Valley is a community of entrepreneurs, universities, accelerators, and investors in the city of Belo Horizonte, state of Minas Gerais, Brazil. Despite of the obvious reference, we’re not trying to replicate Silicon Valley in Brazil — we’re 200+ restless and hungry founders trying to make it happen in a developing country, and the community name was simply a joke that got traction.
Nevertheless, we must be doing something right. San Pedro Valley, or SPV as we call it, is famous for being the most developed startup ecosystem in Brazil and a key hub in Latin America. This is not our saying: the praise comes from The Economist, Forbes and many other respected sources.
“While we were impressed with the quality of entrepreneurs and startups in all three cities we visited [São Paulo, Rio de Janeiro and Belo Horizonte], unquestionably, it was in Belo Horizonte that we sensed the highest level of community.” Roi Carthy, TechCrunch, May 2012
It was early 2012 when I went to SPV’s first happy hour, San Pedro Cerva — “cerva” is a slang for beer. That’s where I had the chance to meet an incredible group of people trying to accomplish the very same things I were. I went home amazed, and really excited about it.
Today there are more than 200 startups in the community and some of them are thriving on their markets and becoming leaders in Brazil and Latin America, including Samba Tech, Rock Content, Sympla, Hotmart, Dito and Meliuz — just to name a few. For more information about SPV, there’s an article from Anna Heim for The Next Web from december 2011 that is worth reading.
About SEED
Back in the San Pedro Cerva episode, I met this guy called Luiz Filipe Serravite. He was an entrepeneur that had just come back from the Startup Chile program after a couple of months living in Santiago, Chile. He was amazed by the program and the idea of the government actively supporting startups, so he came up with a way to reach the State Governor and proposed the idea of creating something similar in Brazil.
Luiz was involved in the initial development and design of the program. He has eventually left the initiative to go live in the US, but his ideas and initial contacts became the foundation to the program later created and named as SEED (Startups and Entrepreneurship Ecosystem Development).
This description was taken from the official program web site:
Created by the Government of Minas Gerais, SEED is an accelerator program for passionate people who dream big and make things happen.
Entrepreneurs from all around the world descend upon the state, bringing with them in their dreams, experiences, ideas and their determination to build something innovative.
The mission of SEED is simple: Transform Minas Gerais into the most important birthplace and acceleration hub for tech entrepreneurs in Latin America.
The program benefits included up to US$40,000 dollars per team, an incredible office space, mentorship, training, workshops, and a wide network of entrepreneurs, partners and investors. Equity free.
And the whole thing was really well executed. All the main stakeholders of the ecosystem were involved in its conception, including the entrepreneurs themselves. Government reps, mentors, investors, and entrepreneurs were all working with the same objective: to promote and develop startups and innovation in the country.
I never participated in the program as an accelerated startup, but I had countless chances to engage with it, starting from being a host for a foreign startup — yes, all the foreign teams were hosted by a local entrepreneur so they had a warm reception and felt like they were home. I even picked up a group at the airport the first time they landed in Belo Horizonte.
And of course it was not just me. I would certainly say that all founders living in Belo Horizonte have visited the space at least once. The office was open to anyone, either to host an event or even use a desk/internet connection for a couple of hours or days, no matter if you were an accelerated startup or not.
The SEED space gradually became the obvious place to go in San Pedro Valley. Suddenly we all had a place for meetings, happy hours, meetups, startup weekends and whatever came to our crazy minds. It was great for early-stage startups that didn’t have an office yet, but also good for the ones that already had. It was not just about the space — it was a home for the community.
The program was created in 2013 by Governor Antonio Anastasia, through an institution called Escritório de Prioridades Estratégicas de Minas Gerais (or Minas Gerais Strategic Priorities Office). Personally it was one of the first times I have ever been proud of my country/state government. If you have ever heard about politics in Brazil you know corruption and lack of planning is part of our daily news. But these guys were different, they were inspiring and had a truly desire to create something to make a real impact — plus, the program was based on real legislation, and designed to survive government and even party changes.
A lot of people were involved in the conception of the program, but I really need to specially mention André Barrence, Head of the Minas Gerais Strategic Priorities Office and Chairman of SEED, Jaderson Trindade, the Director responsible for the program’s operation, as well as Leandro Lacerda, Rejane Martins and Giuliano Bittencourt. These guys did an incredible job and are considered by the community with really special care.
More than words, the program generated actual results: operating companies, revenue and jobs.
The program was internationally known and considered one of the most important entrepreneurship development initiatives in Brazil.
SEED was responsible for bringing to life 73 companies from 12 different countries that together had R$ 23 million in revenue until the end of 2014, created 145 jobs and raised R$ 10 million from private funds. Plus they influenced the life of 17,000+ people in 55 cities, considering most founders used to mentor and teach kids and young students on low-income communities.
SEED and the government politics
The program was created by the government, so it’s really hard not to relate it to politics of any kind… but it’s important to notice that it was never mentioned or marketered as an initiative from a specific politician or party — specially when it came to take decisions about the structure, operations or investments.
SEED was initialy led by Governor Anastasia, one of the leaders of the PSDB party (Partido da Social Democracia Brasileira, or Brazilian Social Democracy Party). PSDB governed the state for the past 12 years, since Senator Aécio Neves was first elected in 2003 and then followed by Antonio Anastasia, now also a Senator.
The program began to be questionated and re-evaluated in the beginning of 2015, since the new Governor Fernando Pimentel has been elected. He’s part of the PT party (Partido dos Trabalhadores, or Workers Party) — the same party of the re-elected President Dilma Rousseff.
The Secretary of State of Economic Development has denied that the program is in risk to be shut down, and this re-evaluation is part of a broader assessment being done by the new government for all the initiatives and public politics created by the last government.
But that’s not really what it looks like. Entrepreneurs were surprised by the fact that the office has been suddenly closed, leaving startups without a place to work — even those who came from outside the country or the state. Plus, the original contacts the SPV community had in the government have been exonerated right before the office.
Government says that the closing is temporary, but there are no guarantees that the program will ever come back to life in the same place or the same format. The rental contract of the coworking space itself will be ended by April 1st, and the SEED HQ will not be reinstated there.
Rejane Martins, part of the original SEED staff has posted on the group’s official Facebook profile the following statement:
Dear entrepreneurs,
I come to inform you all that, unfortunately, from tomorrow on SEED co-working space will be closed. I’m sorry to let you know on such short notice, but we have been waiting for definitions that by the present moment has not been delivered.
More informations can be taken from Gabriela Costa Xavier, Head of the Secretary of Economic Development, that is also part of this group.
The remaining staff from the original team were also surprised byt the fact that they were let go from their roles in government on Saturday 28th of march. Rejane and the others were informed that the office no longer exists and they will not be incorporated by any other entity within the govern.
Even the program Board members were unaware of the office closing and the future of the program. Yuri Gitahy, one of the most respected angel investors in Brazil and part of our community, has posted a series of tweets in his twitter account saying that he has resigned from his position at the Board, since they were not consulted about any recent program decisions.
Yuri also said it was not a formal resignation, since there’s not even an entity or person in charge of the program to inform his decision.
This article posted today by Estadão, a major newspaper in Brazil, mentioned there might be a dispute between two different government officials for the control of the program, the State Secretariat of Science and Technology of Minas Gerais, Miguel Corrêa (PT) and the State Secretariat for Economic Development, Altamir Rôso (PMDB).
Presently and suddenly, SEED has no funds, no staff and no office.
It’s important to notice that the cost of a State Deputy in Brazil — including his salary, massive benefits, budget for 25 cabinet employees — is close to R$ 2M per year. This is pretty close to the cost to of accelerating a batch of 40 startups in the program. Got it? The cost of one Deputy could fund and host an entire SEED batch for six months.
It gets worse. Earlier this year, the government has approved a 40% salary/benefits raise for deputies — obviously, they think it’s better to make politicians even richer than investing a tiny fraction of that budget in innovation, i.e. two yearly SEED batches.
From the outside, what we see is a clear party dispute where people discard a huge amount of effort/cash/work so they won’t keep initiatives created by the previous administration. They just can’t admit that other parties or politicians did a good job. It’s not a matter of doing what’s good for the country and for the people, but to make sure you can get the proper visibility and political advantages from a perfect program already approved by society — just kill it and rebuild as “yours”.
In the end of the day, the country loses.
San Pedro Valley remains strong with or without government support
Many entrepreneurs have manifested their reactions to SEED’s HQ closing. The general consensus is that we will do everything we can to keep the program legacy alive.
San Pedro Valley existed long before SEED, and will keep existing after it’s gone — welcoming new friends made through this wonderful program.
Our community will remain strong and promoting entrepreneurship — apart from politics. Our beliefs are solid, and we will keep developing entrepreneurs for the future of Brazil.
This article was reviewed by several SPV entrepreneurs. Special thanks to Yuri Gitahy, Luiz Serravite, Matt Montenegro, Pedro Filizzola, Diego Gomes, Roberta Vasconcellos, José de Menezes, Leonardo Conegundes, Mateus Lana, Gustavo Caetano, Bruno Grossi, Christophe Trevisani and André Fonseca.
